professional fees in construction projects in nigeriaewu first day of classes fall 2021

Other provisions include warranties, risk allocation and methods for payment of contractor's fees, as well as performance guarantees. If passed, the proposed legislation will establish a framework for Nigerian professionals to be given preference in the implementation of construction projects in Nigeria. There are 3 stages of payment. The PPA also requires procurement to be conducted in a manner that is: Equitable for ensuring accountability and conformity with its provisions (with the aim of achieving value for money and fitness of purpose). The EIA Act makes it an offence for any person to embark on any activity or project that may have significant environmental effects, without having first undertaken, and submitted to the relevant government environmental agency, an Environmental Impact Assessment Report (EIA). Cost is a vital element in every development. The Lagos State government has also partnered with Nigerian Mortgage Refinancing Company (NMRC) and private developers to construct and deliver 20,000 housing units to the state in the near future. In many cases, the project company is a joint venture entity between a local sponsor and a foreign entity that will provide technical or management services to the project. Advance Fee Fraud and Other Related Offences Act 2006. The main stages are: Selection of projects in each sector to be implemented on a PPP basis by the relevant ministry, department and agency (MDA) charged with the responsibility of regulating that sector. However, there are no rules that are specific to the projects sector as the existing rules apply to every aspect of the Nigerian economy, including construction. 0. The interest payment on a loan to fund a construction project is an allowable deduction before arriving at the taxable profits. This clause requires a subcontractor to be paid within a specific period after the contractor has been paid that is make payment contingent on the contractor being paid. This Scale was used for the next 14 years until 1992 when it was revised. There has been an increase in the development of renewable energy projects, mostly in the form of solar photo voltaic power plants, in the northern part of the country. Construction & Engineering Laws and Regulations Nigeria 2022-2023. The NESREA Act also regulates the effect of a project on the environment. This law is expected to provide a much-needed overhaul of the Nigeria's oil and gas sector, thereby creating multiplier effects across the entire construction chain and the economy. There are other non-compulsory insurance products, such as erection all risk insurance, that a contractor or project company will typically procure. All procuring entities, including MDAs are required to obtain a Certificate of No Objection to Contract Award from the Bureau of Public Procurement before they engage in any procurement process. If this applies, any gains realised from the disposal of the asset will not be subject to capital gains tax but the company will be entitled to claim a roll-over relief if the new asset is acquired, or an unconditional contract for the acquisition is entered into, within 12 months before or after, the disposal of the old asset. Types of Professional Fees 4.2. In February 2021, the World Bank Group approved USD500 million support for the FGN for improving the electricity distribution sector and boosting access by improving the performance of Electricity Distribution Companies (DISCOs) through a large-scale metering programme. 1 Percent of General Construction Total General Construction Estimate = $50,000,000 25% of Total General Construction = MEP Portion of the Construction = $12,500,000 MEP Design Fee: as Percentage of the MEP Construction (4%): Design Fee = $12,500,000 x 4% = $500,000 as Percentage of General Construction (25% x 4% = 1%): Strengthening the sector's institutional framework and increasing transparency. Arbitration is either ad hoc or institutional. The modes of appointment of construction professionals in Nigeria vary between the public sector and the private sector. Including provisions that require interest on delayed payments is also one of the means of ensuring that contractual payments are made promptly and diligently. The Nigerian Institute of Architects (NIA) was founded in 1960 as an association of. In 2019, the Ministry of Works and Housing set aside a total sum of 19.8 billion naira ($55 million) for the construction of 2,383 units of housing across the 36 states of Nigeria under the National Housing Program. Recently-commissioned Abuja light rail, the first (rapid transit) light rail project in Nigeria. Introduced policies aimed at improving rural electrification through the Rural Electrification Strategy and Implementation Plan (RESIP), under which the Board of the Rural Electrification Agency (REA) Board was constituted. The contractual provisions that govern or limit liability include provisions dealing with any of the following: Indemnities on account of losses caused by delay. However, Nigeria currently builds just 2,000 houses per year. Rules of the Chartered Institute of Arbitration (UK). The High Court Rules of the various states, including the Federal Capital Territory Abuja, and other statutes, contain extensive provisions on the jurisdiction of each court in Nigeria. However, Nigeria currently builds just 2,000 houses per year. In terms of transaction structure, a special purpose vehicle (project company) is usually set up by the sponsors for the sole purpose of implementing the project. Professional fees in building projects Structural engineering fees Rp200,000 to Rp 300,000 per square metre MEP (mechanical, electrical and plumbing) design fees Rp120,000 per square metre Quantity Surveyors fees Rp60,000 per square metre These include the: Abia State Public Private Partnership and Investment Promotion Law of 2016. Federal Ministry of Works Contract (variant of the JCT). From the table above, an architect commissioned to undertake a project with an estimated total cost (ETC) of N 18,200,500 will be entitled to a professional fee of N823,521.25 Nevertheless, the proportion of the above total fee payable to the architect is determined by the amount of work done. Professional fees in building projects Structural engineering fees Rp200,000 to Rp 300,000 per square metre MEP (mechanical, electrical and plumbing) design fees Rp120,000 per square metre Quantity Surveyors fees Rp60,000 per square metre Some Nigerian construction contracts permit the owner to request the contractor to alter the works and services (or any part of them) through change orders, change requests, and change notices. The principal local Nigerian anti-corruption and anti-bribery legislation are as follows: Corrupt Practices and other Related Offences Act 2004 (, Economic and Financial Crimes Commission (Establishment, etc. In June 2020, the FGN approved a USD120 million continued construction and completion of the Kashimbila multipurpose dam in Taraba State, which is expected to generate 40 MW of electricity and water for the community. There are various mechanisms available to Nigerian companies for mitigating taxes, depending on the nature of the transaction and the project. The EFCC Act prohibits anyone from concealing, removing from Nigeria or transferring to nominees, the proceeds of an economic and financial crime, on behalf of another, with the knowledge that such proceeds are as a result of criminal conduct by the principal. Equals N4.5m (architects fee for pre-contract services) Note; ARCON conditions of engagement say that these fees are the minimum that should be charged, therefore, your design circumstances may warrant a little increase in the percentage. The EIA Act specifies different types of projects in respect of which a mandatory study must be conducted. This is, however, a contractual right and can only be exercised if it is included in the project document. This can be done as currently there are no thin capitalisation rules in Nigeria and parties can take advantage of this. 1 Percent of General Construction Total General Construction Estimate = $50,000,000 25% of Total General Construction = MEP Portion of the Construction = $12,500,000 MEP Design Fee: as Percentage of the MEP Construction (4%): Design Fee = $12,500,000 x 4% = $500,000 as Percentage of General Construction (25% x 4% = 1%): The continuing expansion of Nigeria's middle class has made investments in condominiums and shopping malls a popular choice for private capital. According to the Minister of Transport, the Kano-Maradi rail is aimed at facilitating bilateral trade between Nigerian and Niger. The slow implementation of government budgets, however, has been a perennial problem in Nigeria. The two major funding models for local and international projects in Nigeria are: Equity, including mezzanine finance. The General Conditions of Contract for the procurement of works 2011. Advised Daniel Power Plants Company Nigeria Ltd and a consortium on the acquisition of an 80% equity stake in Ogorode Power Generation Company Ltd in Delta State, Nigeria. There is no specific law on how construction disputes should be resolved in Nigeria. The main tax issues which arise on projects include whether there will be value added tax, the applicable rate of stamp duty on the transaction document(s), and transfer taxes in relation to land or other property. For example, in Lagos State, the transfer fees payable on a transfer of land total 3% of the assessed fair market value of the property. WebThis 1978 document had the architects fee starting at 4.5% for a project of N250,000.00 and sliding thereafter. In Nigeria, force majeure events are commonly classified into the following three categories: It is not enough for a party to allege that its inability to perform a contract is as a result of circumstances beyond its control. WebLowe (2003) further stated that the value added of construction is in the range of 7% to 10% for highly developed economies and around 3% to 6% for underdeveloped economies. The Nigerian construction industry struggled in 2020 due to disruptions caused by the COVID-19 outbreak and the subsequent lockdown measures. Key member of the team that advised Stanbic IBTC Bank PLC, as Lender's counsel, with respect to an USD11.3 million medium term loan facility advanced for the refinancing of a residential real estate development in Durunmi, Abuja. The Act provides that any person who deals with harmful waste without lawful authority is guilty of an offence. The deal was valued at USD414.9 billion. Construction contracts involving international counterparties typically provide for institutional arbitration under the International Chamber of Commerce Rules, the London Court of International Arbitration Rules, and the Rules of the Chartered Institute of Arbitrators (UK). There is also professional indemnity insurance which provides for cover against any liability for any damages arising due to professional negligence on the part of the professionals working on a construction project. Member of the team that advised Falcon Kinetics Limited on the Construction of the Civil and Structural Works for the development of a 4,000MT LPG Bulk Gas Storage Facility and Jetty Project at Rumuolumeni, Saipem/Aker Base Road, Port Harcourt, Rivers State, Nigeria. Key member of the team currently advising a leading Nigerian broadband communication solution integrator on the financing of fibre optic cables and the restructuring of existing debt. Advised New Electricity Development Company Ltd on the acquisition of Ikeja Electricity Distribution PLC. There are 3 stages of payment. Table of Professional Charges 4.5. Other sanctions imposed under the EFCC Act include the forfeiture of assets (both within and outside Nigeria) and the freezing of bank accounts maintained by a person accused of the commission of a financial crime. NAIJA LIGHT Solar Electrification Program. In most contracts for the construction of process plants, liability is usually capped at 25% of the contract price. The rates payable will depend on which of Nigeria's 36 states the real property is located in. Tertiary education tax of 2% of its assessable profit. A change in applicable laws and standards necessitates such change. The following forms of security are typically taken in infrastructure projects: Share charge on all the shares and other equity rights (present and future) of the sponsors in the project company (and holding company). The contractor is, therefore, required to comply with health and safety regulations relating to employees that work in certain areas of the project or that operate certain machinery wearing protective clothing. The insurance must have a value that is at least three times the total annual emoluments of all the employees. Fee proposed 10% of Gross Rent Payable. The PPP model has been implemented in various sectors of the Nigerian economy such as ports, transportation (road, rail, water and airports), health, housing, education, free trade zones, and most recently, in the electric power sector. Preparation of an outline business case by the relevant MDA of the sector in which the PPP is to be implemented. Time or Duration Based Fees CHAPTER FIVE: Adjustment of Fees 5.1. WebThis 1978 document had the architects fee starting at 4.5% for a project of N250,000.00 and sliding thereafter. Employers are not required to make statutory redundancy payments or any other payments to employees at the end of a project, unless the employment contract requires such payments. London Court of International Arbitration Rules. Currently leading the team advising a US company in connection with the development of a 30MW Coal fired power plant in Nigeria. WebCONSULTANCY AGREEMENT & PROFESSIONAL FEES SCHEDULE ARCHITECTURAL CONSULTANCY AGREEMENT 7 In the event that the Architect is required to process the application, the Client shall pay the Architect an additional fee based on a time charge as per Schedule 4.11 and expenses based on cost plus 10% in respect of the processing of such This trend has continued in 2021, and a report published by the World Bank in June 2021 (. Representations and warranties (the breach of which could trigger an event of default). The Pension Reform Act 2014 imposes an obligation on employers to obtain life insurance cover for all their employees. Advised a syndicate of lenders in connection with the amendments to, and increase in the size of a loan of approximately USD530 million to Shoreline Natural Energy Resources Limited, a Nigerian oil and gas exploration and production company. It is uncommon for payment obligations under construction contracts to be secured by land or property. An alternative is to include a direct payment clause which allows for the employer to step in and pay the subcontractor directly where the contractor fails or is unable to make payments. The standard document for PPP is a concession agreement which is executed between the relevant government agency and the private sector participant. For both local and international projects, a syndicate of lenders typically provide the debt financing but some local projects are funded on a bilateral basis. The EIA Act sets out the principles, procedure and methodology for determining the environmental effects of public and private projects. (. The Stamp Duties Act 2004 (as amended) requires stamp duty to be paid on instruments executed in Nigeria or relating to any property situated in Nigeria or matter to be done in Nigeria. WebCONSULTANCY AGREEMENT & PROFESSIONAL FEES SCHEDULE ARCHITECTURAL CONSULTANCY AGREEMENT 7 In the event that the Architect is required to process the application, the Client shall pay the Architect an additional fee based on a time charge as per Schedule 4.11 and expenses based on cost plus 10% in respect of the processing of such WebFee is to be negotiated subject to a minimum of N50,000=. This Scale was used for the next 14 years until 1992 when it was revised. Professional bodies are formed as an association of professionals which enhance, control, and regulate the activities of its members. It is hoped that this situation will generally improve following the completion of various road projects and road construction from funds realised from the FGN Sukuk (. Advising a leading Nigerian broadband communication solution integrator on the financing of fibre optic cables and the restructuring of existing debt; Advising IFC in connection with the proposed facilities of up to USD325 million to a liquefied natural gas company in Nigeria. Advised NG Power-HPS Limited in connection with the acquisition of majority shares in First Independent Power Limited. Where the assets to be used in a construction project are liable to VAT, the purchaser must pay VAT on the consideration payable for such assets at the rate of 7.5%. It also contains information on the legal, financial, environmental and technical aspects of the proposed project. Despite the impact of the pandemic that led to a significant decline of construction activities, the industry was forecast to be one of the lead drivers of the Nigerian economy in 2021. Rules of the sector in which the PPP is to be implemented on... 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